• Tuesday, June 25, 2024
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BusinessDay

NLC’s wage standoff: A fight for survival or economic suicide?

Minimum wage: How not to leave pensioners behind

The Nigeria Labour Congress (NLC)’s audacious demand for a near-sixteen-fold increase in the minimum wage has ignited a national firestorm. While ₦490,000 may seem like a utopian ideal, it exposes a harsh reality – Nigeria’s current minimum wage of ₦30,000 is a pittance, barely affording basic necessities. The NLC is right to challenge this status quo, but their proposal, however well-intentioned, requires a sobering dose of economic pragmatism.

We should have done all things possible to avoid the commencement of this strike action. To say the obvious, it is bad news for all concerned. Strikes are disruptive and create ripple effects that impact everyone, from the workers on the picket lines to the businesses and consumers who rely on their services. It is not good for any economy, let alone one already on the brink, such as Nigeria’s. An economy that is haemorrhaging, as is the case with the Nigerian economy today, cannot afford such disruptions. With the inflation rate at an alarming 33.69 percent, the highest it has been in over two decades, the economic environment is already extremely fragile. This inflation rate has eroded the purchasing power of Nigerians, making everyday necessities increasingly unaffordable.

The demand for a significant wage increase is not without precedent. Historical data on Nigeria’s minimum wage reveals a pattern of periodic increases aimed at improving the standard of living for workers. In 1981, the minimum wage stood at ₦1,500. By 1991, it had doubled to ₦3,000, reflecting attempts to cope with inflation and economic challenges. The turn of the millennium saw the wage rise to ₦5,500 in 2000. Subsequent years witnessed more substantial hikes, with the wage reaching ₦18,000 in 2011, ₦18,500 in 2013, and a significant jump to ₦30,000 in 2018.

The current situation is dire, and a bird’s-eye view of the economy reveals a landscape marked by instability and hardship. Businesses are struggling to survive, unemployment rates are soaring, and the cost of living is skyrocketing. The strike exacerbates these issues, leading to further economic contraction and deepening the financial woes of ordinary Nigerians. Therefore, it was imperative to take all necessary measures to prevent this strike, as its impact will be felt across all sectors of the economy, prolonging the recovery process and making it even harder to stabilise the nation’s finances.

Simply throwing money at the problem risks triggering a vicious cycle of inflation. Without a corresponding surge in productivity, businesses would be forced to raise prices, further eroding the purchasing power of that very wage increase. The NLC must acknowledge this risk and come to the table with solutions that address both worker well-being and economic stability. Asking for over ₦490,000 a month as a basic salary is unrealistic without considering where the funds will come from. If the government resorts to printing more money, it will worsen the inflationary spiral, making such phantom possession of money worthless.

We must remember that the minimum wage of ₦30,000, though inadequate now, was not paid by some state governments in the federation. How then do we expect such a quantum increase in basic salaries as is currently being demanded by Labour? All concerned should honestly ask themselves how realistic it is to be asking for such a huge increase in salary.

Nigeria needs a multi-pronged approach. First, genuine dialogue is paramount. The NLC, government, and private sector must engage in open discussions to craft a sustainable solution. A “one size fits all” approach won’t work. Different sectors may require tailored solutions that consider industry-specific productivity levels.

Second, healthcare is non-negotiable. Access to quality medical care should not be a privilege reserved for the wealthy. Universal health insurance would not only protect worker health but also boost overall productivity. However, such a program requires a well-functioning healthcare system. Investments in infrastructure, personnel training, and essential supplies are crucial to ensure a robust healthcare safety net for all Nigerians.

Third, worker productivity must be a national priority. Stepping up investments in skills development, education, and technology will empower Nigerian workers to compete in the global marketplace. This, in turn, justifies higher wages while strengthening the national economy.

Finally, Nigeria’s foreign exchange volatility is a thorn in its side. The unpredictable fluctuations in the Naira against major currencies stifle economic stability. A comprehensive FX policy is crucial. Diversifying the economy beyond oil dependence, encouraging local production, and reducing reliance on imports would foster a more stable FX environment, benefiting businesses and consumers alike.

Nigeria deserves a vibrant economy that empowers both workers and businesses. Currently, a stifling business environment riddled with corruption and bureaucratic hurdles hinders growth. Streamlining regulations, fostering transparency, and combating corruption will create a more favourable atmosphere for both employers and employees. A thriving business sector translates to better wages, job security, and a more equitable society.

Therefore, we appeal to organised labour to tread softly and drastically lower their sights with regard to their demands. A complete shutdown of the economy is a blunt instrument, inflicting pain on everyone and ultimately hindering progress.

A more constructive approach would be to return to the negotiating table with a willingness to compromise. Let’s focus on finding common ground that addresses the very real need for a living wage while also prioritising economic stability.

By working collaboratively, both labour and the government can ensure a brighter future for Nigerian workers and the nation as a whole.